Correlation Between Morgan Stanley and Columbia Funds

Can any of the company-specific risk be diversified away by investing in both Morgan Stanley and Columbia Funds at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Morgan Stanley and Columbia Funds into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Morgan Stanley Direct and Columbia Funds Series, you can compare the effects of market volatilities on Morgan Stanley and Columbia Funds and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Morgan Stanley with a short position of Columbia Funds. Check out your portfolio center. Please also check ongoing floating volatility patterns of Morgan Stanley and Columbia Funds.

Diversification Opportunities for Morgan Stanley and Columbia Funds

0.0

Correlation Coefficient

Morgan Stanley  Columbia Funds

Pay attention - limited upside

The 3 months correlation between Morgan and Columbia is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Morgan Stanley Direct and Columbia Funds Series in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Columbia Funds Series and Morgan Stanley is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Morgan Stanley Direct are associated (or correlated) with Columbia Funds. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Columbia Funds Series has no effect on the direction of Morgan Stanley i.e., Morgan Stanley and Columbia Funds go up and down completely randomly.

Pair Corralation between Morgan Stanley and Columbia Funds

Given the investment horizon of 90 days Morgan Stanley is expected to generate 57.57 times less return on investment than Columbia Funds. But when comparing it to its historical volatility, Morgan Stanley Direct is 27.36 times less risky than Columbia Funds. It trades about 0.04 of its potential returns per unit of risk. Columbia Funds Series is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  513.00  in Columbia Funds Series on September 15, 2024 and sell it today you would lose (413.00) from holding Columbia Funds Series or give up 80.51% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	84.01%
Values	Daily Returns

Morgan Stanley Direct  vs.  Columbia Funds Series

Morgan Stanley Direct

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Morgan Stanley Direct are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite quite unfluctuating fundamental indicators, Morgan Stanley may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Columbia Funds Series

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Columbia Funds Series has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Columbia Funds is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Morgan Stanley and Columbia Funds

The main advantage of trading using opposite Morgan Stanley and Columbia Funds positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Morgan Stanley position performs unexpectedly, Columbia Funds can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Columbia Funds will offset losses from the drop in Columbia Funds' long position.

The idea behind Morgan Stanley Direct and Columbia Funds Series pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.